Textedit, as the name implies is pretty basic. With a lot of work you could use it as a word processor but.....
MS Word is available as part of MS Office 2004, however this is not a cheap option. Amazon is selling it for $299. It depends if you can justify spending that amount of money.
Free options include
1)
Abiword a free Open Source word processor. Not as powerful as MS Word but it may suit your needs
2)
Neo Office A free Open Source office suite based on Open Office. IIRC it's a Java based application
3)
Open Office A free Open Source office suite
The differences between the last two are that
1)Neo Office, being (As I said I think) Java based will not be the fastest application around. It is however now available in an Aqua version.
2) Open Office requires you to install (for the time being) the X11 environment In my experience it's not a speed king either
Personally I'd try Abiword first, and if that doesn't meet your needs go for Neo Office
There are a few commercial word processors available as well. I haven't used any of these so you'll have to decide for yourself. Or wait for someone with a better knowledge of them than me to reply. C'mon guys
1)
Mariner Write2)
Nissus Write Express3)
MellelMellel does seem to be good for long documents and creative writing but you will have to consider things like format compatibility before choosing any of the commercial offerings